Why You Should Care About CareShield Life

By March 16, 2021 March 22nd, 2021 Articles

Why You Should Care About CareShield Life

If you are a Singaporean or PR born in the year 1980 or later, CareShield Life is mandatory for you.

The first thing that comes to your mind might be “Huh what is this? Is it another insurance?”

You will automatically be covered by CareShield Life on 1st Oct 2020 or when you turn 30, whichever is later, regardless of pre-existing medical conditions and disability. Basically, CareShield Life is a long-term care insurance which provides financial protection against long-term care costs of Singaporeans in the event of severe disability. Since this is a mandatory policy, it’s better to have at least an idea of what is it about.

Being Disabled In Singapore

The impacts of being severely disabled would cause you to lose the ability to earn an income to support your loved ones and lifestyle. Definitely not an ideal situation to be in but all the more we should be prepared for it.

Let’s look at some statistics by MOH:

  • 1 in 2 healthy Singaporeans aged 65 and above could become severely disabled in their lifetime.
  • The median duration that Singaporeans could remain in severe disability is 4 years, and 3 in 10 Singaporeans could suffer for 10 years or more
  • The top 3 causes of severe disability are cancer, stroke and degenerative diseases
  • Singaporeans with a severe disability would need an average of $2,324 to cover daily living expenses

The definition of “severe disability” is the inability to independently perform at least 3 out of 6 Activities of Daily Living.

However, please note that severe disability insurance can be different from TPD (total permanent disability) insurance.

CareShield Life

CareShield Life is a step forward by the government to deal with the increasing needs of the long- term care of Singaporeans. Though mentioned that it is mandatory for Singaporeans born in 1980 or later, CareShield Life is not mandatory for Singaporeans and PRs born in 1979 or earlier.

CareShield Life is fully payable by CPF Medisave. Assuming the age of 30, annual premiums are $200 and $250 for males and females respectively. The premiums will increase at a rate of 2% a year for the first 5 years.

CareShield Life offers a monthly pay-out of $600 a month upon a severe disability for Singaporeans aged 30 and above. The pay-outs increase by 2% every year until 2025. From 2026 onwards, the rate of increment will be subjected to further review.

Upon a claim at any age, your pay-outs are locked in and will not increase. You would also stop paying premiums. Let’s use Tom and Harry who are both born in 1990 as an example, as shown
below.

CareShield Life VS ElderShield

Before 1 st October 2020, ElderShield was the older and less up to date version of a government provided severe disability insurance plan. Some have even dubbed CareShield Life as ElderShield 2.0!

Below is a table comparing CareShield Life and ElderShield.

All Singapore Citizens will receive up to S$250 over the first 5 years to help pay for the premiums of CareShield Life. Additional premium subsidies are also available for people with a monthly per capita
household income of:

There you have it! Yes, CareShield Life is another insurance plan. However, with its low premiums fully payable by CPF Medisave, lifetime coverage for disability and existing available government subsidies, CareShield Life is a complement to your existing financial portfolio. Hope you enjoyed the article and stay safe!

– Bryan Cheong, (@_bryancheong), Financial Services Consultant